Morningstar Investment Management has confirmed the launch of two income portfolios as part of its bid to grab a greater share of the discretionary market.
Investment Adviser revealed on Monday the company was planning to launch a set of income-focused discretionary portfolios imminently - which it has confirmed this morning.
The group also said discussions were under way to launch a range of multi-asset global absolute return portfolios.
The two income portfolios - Moderately Cautious Income and Moderate Income - will sit within the Morningstar OBSR Managed Portfolios service alongside existing passive and active portfolios and will draw on Morningstar’s global investment and manager research capabilities.
Both portfolios will aim to target regular, reliable income for the UK market.
The multi-asset portfolios will invest in a range of different funds, using Morningstar’s fund research analysts from across the globe.
The portfolios will be available from Morningstar or on platforms and have been targeted towards financial advisers.
The Morningstar Investment Management Europe portfolio management team will actively manage the portfolios, though the asset allocation will be provided by Morningstar’s affiliate, Ibbotson Associates.
Dan Kemp, co-head of investment consulting and portfolio management for Europe, Middle East and Africa, said traditional asset allocation models were “poorly suited to building income portfolios”.
“Because they use the same capital market assumptions and optimisation process for both growth and income portfolios, traditional models do not consider the ability of the portfolio to deliver a sustainable income and can lead to investors overpaying for high-yielding assets,” he said.
“Using bespoke capital market assumptions and an optimisation approach specifically designed for income investing, we have created completely new income portfolios that aim to meet investors’ increasing need for a sustainable income.”
The Morningstar OBSR Managed Portfolios service launched in May 2013 with five risk profiles: Cautious, Moderately Cautious, Moderate, Moderately Adventurous, and Adventurous.
